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New routes for Cyprus Airways

New Greek Island routes for Cyprus Airways.

Cyprus Airways has increased flights to Greece and the Greek Islands despite posting a €32.1 million loss in the first half of 2012. Events to mark the launch of four routes have been held in Athens, Thessaloniki and the Greek islands of Rhodes and Crete,

More air routes in Greece and the Greek Islands have not been ruled out as Cyprus Airways bids to turn around its fortunes.

The new Greek routes will operate flights between Thessaloniki and Athens (three flights daily); between Athens and Heraklion, Crete ( two flights daily); between Athens and Rhodes (two flights daily); Thessaloniki and Heraklion (one daily flight); Thessaloniki and Rhodes (three flights a week) and Heraklion and Rhodes (four flights weekly).

Cyprus Airways posted a €32.1 million loss in the first half of 2012and a €29.3 million loss in the same period in 2011. The airline blamed lower revenues on a drop in passenger numbers of around 75,000 and cargo by 21.2% to €71.4 million.

The troubled national Cyprus carrier has cut a number of routes in 2012 as it tried to concentrate on profitable destinations.

The new Greek routes come as Aegean Airlines is in talks to buy domestic rival Olympic Air with the two main Greek carriers looking to consolidate to cope with the country's economic downturn.

The Greek economy is in its fifth year of recession as austerity measures increase to tackle the country's debt crisis. Both airlines tried to merge in 2010 but the European Commission blocked the deal on competition grounds.

Now the Greek economic slump could open the way for the two airlines to get the green light from regulators as both carriers have seen their market share shrink during the crisis.

The entry of Cyprus Airways into the Greek market could also help their merger plans. The EU blocked the merger plans in January 2011 on grounds that the combined Greek carrier would have a virtual monopoly in the domestic air market.

Since 2008, air passenger traffic in Greece has fallen 30% and revenues have dropped 45%. The average fares on domestic Greek routes have dropped 25% over the last three years even though fuel costs have risen.

Aegean lost €27.2 million last year and expects to end 2012 with even bigger losses while Olympic lost €37.6 million in 2011.

Olympic was founded in 1957 by the late shipping magnate Aristotle Onassis but fell into steady decline after decades of control by the Greek government until it was privatised in 1999.

Aegean claims a merger deal could save €30-35 million in 18 months by rationalising administrative and technical divisions.

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